There are many different reasons why Georgians may decide to file for bankruptcy. Maybe their house has greatly depreciated, maybe they have a lot of credit card bills, maybe they lost their jobs, etc.
It may surprise some people that many Georgians also cite divorce as the primary (or one of the primary) reasons for why they opted to file for bankruptcy. A divorce and a bankruptcy are both significant life events that have long-lasting and important consequences on a person’s life. Therefore, the decision to undertake either or both of these actions is one that should not be arrived at lightly. For the reasons discussed below, it is always in a person’s best interests to consult both a divorce attorney and a bankruptcy attorney before embarking on either of these processes.
Be Aware of the Divorce and Bankruptcy Costs
It is probably not a surprise to most readers that the divorce process costs money – there are court costs involved and depending on the applicant’s personal circumstances, there may also be child support, alimony, interim spousal support, etc. Additionally, getting a divorce typically also results in splitting up marital assets. After your divorce is final, will you continue to live in the marital home or will you need to move? Will you still have a car or will you need to buy a new one? All of these costs should be taken into account when deciding when to file bankruptcy as a bankruptcy applicant’s monthly bills are an important aspect of a bankruptcy strategy and petition.
Additionally, though it may seem counter-intuitive, it does cost money to file a bankruptcy petition too. At the very least, the court requires a filing fee for each petition and there are usually other costs as well.
Filing bankruptcy will not relieve you from paying alimony or child support. You will still be responsible for these debts even if your other debts (such as a mortgage and credit card bills) are ultimately discharged (i.e. erased) during the bankruptcy process.
Which Marital Debts are Your Debts
It can be difficult to “assign” any given marital debt (a debt incurred during the course of the marriage) to one spouse, and couples can spend hundreds or thousands of dollars litigating these issues in court. Additionally, a person can incur different obligations during the bankruptcy and divorce proceedings and these obligations my conflict with each other.
For instance, let’s say the wife is ordered to pay the couple’s joint credit card bill during divorce proceedings, but then she files bankruptcy and the debt is discharged. The husband may end up paying the bill because the husband is still obligated to the credit card company. The husband may then be able to seek reimbursement for this cost from the wife because the wife’s bankruptcy may discharge her obligation to the creditor but not to her former husband. (These types of proceedings can be very lengthy and it may be difficult to seek and obtain reimbursement, an obstacle which further underscores the importance of consulting an attorney concerning these matters).
Joint Bankruptcy vs. Single Bankruptcy
Sometimes, it is better to try to settle all of the marital debt issues before dissolving the marriage. This can be accomplished by filing a joint bankruptcy with your spouse before initiating the divorce proceedings. When you file a joint bankruptcy, you provide the bankruptcy court with information on all of your shared debts and assets and the court uses this information to decide how to reorganize or discharge your debts. This can be advantageous but it should also be mentioned that filing a joint bankruptcy may require significant communication and cooperation between the two spouses, so if the marriage is already on bad terms, the bankruptcy made be jeopardized.
As you can see, it is very important to speak to an attorney about all of these possibilities. It may be difficult to take the first step in filing for bankruptcy and/or divorce, but our office is here to help you. Contact our office today to speak to a knowledgeable bankruptcy attorney who can explain all of your available options and help you make the best decisions possible.